Two Australian cryptocurrency companies, NGS Crypto Pty Ltd and NGS Digital Pty Ltd, have recently collapsed into liquidation, leaving a trail of financial devastation for investors. The collapse has sparked federal court proceedings against the directors of these companies, namely Brett Mendham, Ryan Brown, and Mark Ten Caten, amid allegations of mismanagement and regulatory breaches.
The Australian Securities and Investments Commission (ASIC) has taken decisive action against these entities, filing civil proceedings and raising concerns over the companies’ practices. NGS companies, which operated as blockchain cryptocurrency mining firms, purportedly targeted Australian investors, enticing them to establish self-regulated superannuation funds. These funds were then converted into cryptocurrency and invested in blockchain mining packages promising fixed-rate returns.
ASIC’s investigation reveals that approximately 450 investors entrusted a staggering $62 million to these companies. However, it is alleged that NGS companies provided these financial services without the requisite Australian license, raising serious legal and regulatory concerns.
In response to the collapse, the Federal Court has appointed liquidators to oversee the management of the digital currency assets belonging to NGS companies and their directors. This move aims to safeguard investors’ interests amid fears that digital assets invested in blockchain mining products could be at risk of dissipation.
Moreover, ASIC has barred Mendham from leaving Australia and is actively seeking to prevent NGS companies from continuing to provide financial services without proper authorization. Joe Longo, chair of ASIC, has issued a stern warning to Australians regarding the perils of investing their self-managed super funds in cryptocurrency ventures. Longo emphasizes the need for regulatory compliance within the crypto industry to protect consumers from financial harm.
This collapse is not an isolated incident in the Australian cryptocurrency landscape. In a parallel development, DCA Capital, Digital Commodity Assets Pty Ltd, and the Digital Commodity Assets Fund have also faced liquidation proceedings, with federal court actions initiated against their director, Ashod Balanian. Similar concerns regarding mismanagement, lack of licensure, and potential breaches of investment scheme requirements have surfaced in this case as well.
KordaMentha, appointed as liquidators for these companies, has uncovered staggering debts amounting to $100 million owed to 100 investors. The Federal Court has taken decisive action, freezing Balanian’s assets totaling $55 million and impounding his passport. However, Balanian’s lack of cooperation with liquidators underscores the challenges faced in recouping losses for investors affected by these collapses.
The collapse of these cryptocurrency companies serves as a stark reminder of the volatility and risks inherent in the digital asset market. It underscores the urgent need for robust regulatory oversight to protect investors and maintain the integrity of financial markets. As authorities continue to crack down on non-compliant entities, investors are urged to exercise caution and conduct thorough due diligence before venturing into the cryptocurrency realm.
